The European Union opened a formal antitrust investigation into allegations that Google abuses its leading role in the advertising-technology sector, the most wide-ranging case yet to look at that pillar of the tech giant’s business.
The European Commission, the EU’s top antitrust enforcer, said Tuesday that its investigation, which has been under way informally since at least 2019, will look at a broad array of allegedly anticompetitive business practices around the Alphabet Inc. unit’s brokering of advertisements and sharing of user data with advertisers across websites and mobile apps—one of the newest areas of antitrust scrutiny for the company.
Some of the EU’s investigation will cover similar ground to a case filed last year against Google by a group of U.S. states led by Texas. Similar areas include Google’s allegedly favoring its own ad-buying tools in the advertising auctions it runs.
But the EU probe will also cover complaints that haven’t yet been the subject of formal inquiries anywhere, including Google’s alleged exclusion of competitors from brokering ad buys on Google-owned video site YouTube.
The EU investigation is also examining Google’s plans to block certain kinds of user-tracking technologies on its platforms, such as the Chrome browser and Android mobile operating system. Curtailing such tracking responds, at least in part, to pressure from privacy regulators and activists, but has led to antitrust complaints from competitors in the advertising-technology industry.
“Online advertising services are at the heart of how Google and publishers monetize their online services,” said Margrethe Vestager, the EU’s antitrust chief. “We are concerned that Google has made it harder for rival online advertising services to compete in the so-called ad tech stack.”
A Google spokeswoman said European businesses choose to use Google’s advertising tools “because they’re competitive and effective,” adding that the company “will continue to engage constructively with the European Commission to answer their questions.”
The opening of a case is a key procedural step in European competition probes. If the commission finds evidence of wrongdoing, it can then file formal charges that could lead to fines of up to 10% of a company’s global annual revenue and orders to change behavior. But the commission could also close the case without charges.
The EU’s new Google case is the latest example of a wave of antitrust enforcement in Europe. The commission in April filed formal charges against Apple Inc. for allegedly abusing its control over the distribution of music-streaming apps, including Spotify. In November, it filed formal charges against Amazon.com Inc. for allegedly using nonpublic data it gathers from third-party sellers to unfairly compete against them. Both companies denied wrongdoing.
Tuesday’s case is the first time the commission has formally opened one against Google since it issued three antitrust decisions against the search giant, backed by $9 billion in fines, between 2015 and 2018. Google’s detractors have argued that those cases haven’t slowed Google’s business, with its parent having increased net profit 17% in 2020 to $40.27 billion.
Now the EU is taking the broadest look yet at Google’s business of brokering the sale of ads, a complex sector that accounted for 13% of Alphabet’s $182.53 billion in revenue last year. The EU said Tuesday that it estimated the overall online display advertising business in the EU to have totaled 20 billion euros, equivalent to $23.8 billion, in 2019, with a major role for Google as an intermediary.
While the EU case is unique for bringing together many different strands of complaints about Google’s role in digital advertising, some of the areas of the EU case have been the focus of other cases in recent months. The group of U.S. states led by Texas, for instance, sued Google in December 2020 for allegedly operating a digital-advertising monopoly, leveraging its power in one part of the advertising chain to force publishers or advertisers to use other Google-owned tools. That case is ongoing.
Google has also settled, or is in the process of settling, probes on some of the same topics that the EU is investigating. For instance, the company offered concessions to U.K. antitrust regulators early this month to close a British probe into Google’s plans to remove a technology called third-party cookies from its Chrome browser—one of the issues the EU said it would investigate.
Companies that use third-party cookies to track individuals’ browsing habits across multiple websites have complained that Google’s change could leave them at a disadvantage. Google promised to treat competitors fairly and give the U.K. authority at least 60 days notice before removing cookies, so the authority can review its plan and potentially impose changes.
The EU’s investigation of Google’s plan to remove third-party cookies underscores a dilemma when it comes to regulating big tech companies: Protecting user privacy and promoting online competition can sometimes be at odds because one of tech’s most popular business models is targeting advertising at individuals based on their online behavior.
On Tuesday, the commission said that it would take into account privacy protections and the EU’s privacy law, GDPR, during its investigation. “Competition law and data protection laws must work hand in hand to ensure that display advertising markets operate on a level playing field in which all market participants protect user privacy in the same manner,” the commission said in a statement.
To settle a French antitrust case, Google also agreed earlier this month to pay nearly $270 million and make it easier for competing advertising-tech companies to use its tools. That case is also similar to one line of inquiry for the European Commission, which is investigating whether Google’s ad exchange, AdX, and ad-buying tools, called DV360 and Google Ads, have given unfair advantages to each other.
Publishers and ad-tech competitors have complained for years that Google’s ownership of some of the most widely used tools for buying, selling and auctioning ads could lead it to act unfairly. They have also said that Google’s brokering of third-party ad sales as well as its ownership of its own ad-supported products, such as YouTube, creates conflicts of interest.
Google’s Battle With the EU
One of the relatively novel areas the commission is investigating is Google’s move, at the start of 2016, to require advertisers to buy ads on YouTube using Google ad tools rather than third-party tools. Google ad-tech rivals from the time say that decision kneecapped ad-tech competitors because YouTube is by far the biggest online-video site.
“Every agency, every major marketer had to use Google,” said Brian O’Kelley, who was the co-founder and chief executive of AppNexus, an ad-tech company that suffered from the decision and was later sold to AT&T Inc. He said regulators might need to order breakups of some tech companies because fines aren’t dissuasive. “Even if they have a $10 billion fine it still would have been a great decision for Google,” Mr. O’Kelley said.
The commission is also investigating Google’s announcement earlier this month that it would stop letting Android apps see users’ unique advertising identifiers if those users have opted out of targeted advertising. That follows Apple’s move to require app developers to seek permission before collecting a user’s unique ad identifier.
Apple’s move has already been the subject of antitrust scrutiny, after complaints from publishers who said it would diminish their ability to target advertisements. France’s competition authority dismissed a complaint against Apple along those grounds in March.
Access to user data is a throughline of the probe. One area the EU said it would investigate are restrictions that Google places on third parties, such as advertisers and other competitors, from accessing data about users that is available to Google’s own advertising services.
“We will also be looking at Google’s policies on user tracking to make sure they are in line with fair competition,” Ms. Vestager said.
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